- Lebanon is a net importer of oil and (soon) natural gas. Natural gas will be used to power three new power plants that are currently running on fuel-oil, but can be switched to run on natural gas.
- Lebanon suffers from brown-outs because it is unable to purchase the fuel-oil it needs on time. A new government is about to be elected, however. And one of their primary goals is to fix the problem (presumably by speeding up the transition to natural gas). As a side note, the natural gas is to be imported from Syria by pipeline. A pipeline to one of the power stations has already been constructed, but it is not currently operational. It remains to be seen whether the pipeline will be extended to the two other power stations, or whether the government will take the route of liquid natural gas (LNG), which was offered to Lebanon at subsidized prices by either Qatar or Bahrain a few years ago.
- Some oil exploration has been conducted off the shores of Lebanon. The finds do not seem to be significant, but drilling has been proposed as a solution to the problem posed by the expenses of importing fuel. This issue has not been brought up recently, and is probably infeasible in the short-to-medium run.
- Almost five years ago, taxis and commuter buses (which are privately operated) began a mass transition to diesel-run engines. Almost the entire fleets converted their engines from petrol to diesel. The justification was that fuel was becoming too expensive to use. After four or five months of using diesel though, the government banned the fuel, and subsidized a transition back to petrol engines. This government initiative took place after considerable protest with regards to pollution emitted by the diesel engines, which was perceived to be both a health risk and a threat to the tourist industry - one of Lebanon's most profitable (and, consequently, powerful).
- Lebanon's agricultural industry is struggling. Farmers are always complaining that they have no markets for their products, and that costs of production are too high relative to neighboring countries. One of the major reasons they cite for high production costs is the cost of fuel.
- Finally, all of these facts should be put in the context of Lebanon's trade balance, and public debt. Lebanon's public debt in 2004 was 177% of GDP - approximately 35% of that debt is foreign and denominated in either Dollars or Euros. The consequence of those figures is that a significant amount of the country's foreign currency reserves leaves its shores in the form of interest payments to overseas entities. Furthermore, exports in 2004 were estimated at $1.783 billion as compared to imports, which were $8.162 billion. That difference between imports and exports is almost eight-fold! The 2001 estimate for oil consumption was 107,000 bbl/day. At today's prices ($60/barrel), the total cost of importing the fuel adds up to around $2.343 billion per year (assuming that consumption has remained constant since 2001). That price tag adds up to 29% of Lebanon's total import expenses in 2004, and around 131% of the value of exports for the same year.
- Two extrapolations can be made from the above paragraph:
1 - the oil importing and distribution industry is the largest sector in the country's economy, and is likely to defend itself against any threats to its profitability. I have heard that almost every major politician has his or her own distribution franchise and/or storage capacity.
2 - the country is in dire need for alternative energy sources. The import-export figures speak for them selves. Agriculture could be a good way to go since it is a struggling industry, but also the source of strong political constituencies that might counter-balance the power of the fuel industry. Ethanol from farm products such as corn is a good way to go. Bio-diesel is another alternative. It can be made from either farm products such as soy-beans or grease that is collected from restaurants, which is no longer useful for cooking. Either way, we really need to find ways to reduce our dependence on imported energy. An initiative to encourage alternative energy will decrease our current account deficit, and divert money that goes overseas into local industry, hence stimulating sectors of the economy that continue to struggle 15 years after the close of the civil war.
source of data: CIA world fact book